Model 3 production and deliveries have lagged far behind expectations. Musk handed over the first batch in late July at Tesla’s Fremont factory, and the company confidently predicted it would build 1,500 in the third quarter, revving up to 5,000 per week by year’s end.

Instead, the company made just 260 in the third quarter, averaging fewer than three per day. Those delivered went to Tesla employees who had ordered them, with the employees serving as testers to shake out any bugs in the cars.

Tesla confirmed last week that non-employee deliveries are finally beginning to take place. Fourth-quarter production and delivery numbers will likely be released next week.

For Tesla, the first new American car company in decades to survive infancy, 2017 was supposed to be a time of transition — from boutique automaker for the rich to a mass-market player. Musk’s goal is nothing less than shifting the world to sustainable transportation, and he has grand plans to crank up manufacturing for all three of the company’s models, to the point where Tesla can build half a million cars in 2018.

Even for established automakers, introducing a new model is not easy. And if the Model 3 is a test for Tesla, analysts say the company and Musk have yet to pass it...

The sad reality is that for all TSLA's problems getting model 3 production started, the rest of its operations look even worse:

Tesla's Use Of Customer Deposits To Support Operational Burn Bodes Ill For Future Profitability

As we head into the holiday season, it is time for reflection. Reflect on what 2017 was and reflect on what 2018 could be. In this context, in the universe of stocks we cover, there is one story that needs to be told, and that is the story of Tesla (TSLA).

As we enter 2018, Tesla finds itself in a tough spot. CEO Elon Musk's profligate storytelling has had desirable effects at Tesla as the Company has been able to raise billions of dollars to support Mr. Musk's causes. But the consistent non-performance is now starting to take its toll. SolarCity business has dwindled, Solar Roof is not ready, Powerwall is nowhere to be seen, Model 3 is in manufacturing hell, and the Truck has no prospects of ever being profitable. These efforts have, however, consumed, and continue to consume, a lot of cash.

The Model 3 ramp has been a particularly painful one for Tesla. To soften the investor sentiment on a botched manufacturing, Mr. Musk has been talking about exponential ramp of Model 3. It is ironic that no other auto manufacturer talks about exponential ramps and, for almost all manufacturers, bringing a new car to production is akin to turning an on-off switch and not a multi-month or multi-quarter exponential ramp.

Forget about the exponential Model 3 ramp, it appears that the real exponential function at Tesla seems to be occurring with cash burn (image below from fellow contributor Andreas Hopf shows Tesla's cash burn and how Tesla is different from a self-sustaining franchise like Amazon (AMZN))...

With profligate cash burn, Tesla is now spending money faster than it is raising money from the capital markets. In other words, the Company is financially stressed. As we have discussed in an earlier article, based on Q3 results and considering its near-term needs, Tesla is in a cash crunch. As such, there is now a legitimate concern if auditors can certify Tesla to be a going concern without immediate and ongoing capital raises.

Tesla management understands the financial stress and, in addition to traditional capital raises, has now resorted to filling the Company's capital gap with customer deposits on future products...

DaveinOlyWA wrote:SEC investigations are common and in most cases, routine.

Might you be confused about the difference between more routine requests for additional information and formal investigations, by the SEC?

Tesla Correspondence With The SEC Shows A Pattern Of Inaccurate, Incomplete And Misleading Disclosures

The Securities and Exchange Commission (SEC) has sent Tesla (TSLA) no fewer than 85 requests for additional information related to 13 of the company’s filings such as 10-Ks, 10-Q, and 8-Ks over the last five years. A review of the correspondence, in the form of six comment letters between the SEC's Corporate Finance Division and Tesla, shows a pattern of inaccurate, incomplete and misleading disclosures.

The comment letters were sent as a direct result of the agency's review and subsequent determination that the company's disclosures were inadequate. In several cases, the agency had to make multiple requests for better disclosure on the same vital topic. These topics have included cash flow and various critical/significant accounting policies such as the residual value guarantee program.

These numerous requests do not include any of the more serious formal investigations, such as the Model 3 inquiry reported here, that the agency may conduct. Those investigations are handled privately by the agency’s Enforcement Division, a separate unit from the Corporate Finance Division that is tasked with monitoring the company’s periodic filings.

A potential concern for long Tesla investors: the SEC’s Enforcement division is known to originate those formal investigations based on referrals from the Corporate Finance Division. Is that how the Model 3 probe was initiated?...

edatoakrun wrote:Quarterly results and conference call last week indicate the next year is going to be interesting.

IMO, TSLA will probably need to raise more cash, and how welcome it finds itself to be in the debt/equity markets is highly dependent on whether it can meet the (lowered) 2015 sales projections it announced last week.

Reported Y-O-Y drop in US model S sales, for the first time, pretty much confirms that S demand peaked a while ago.

Tesla's Scant Disclosures on the Model 3 Leave Wall Street Guessing

Tesla Inc. may have delivered about four times more Model 3 sedans last quarter than in the prior three months, or boosted sales by a factor of 27, depending on which analyst you ask.

The broad range of estimates reflects how little the electric-car maker has disclosed about the progress it’s made speeding up production of its sedan that starts at $35,000. Model 3 deliveries might have climbed to about 2,917 vehicles, the average estimate of nine analysts surveyed by Bloomberg News.

Mass producing the Model 3 is crucial to Chief Executive Officer Elon Musk’s goal to transition Tesla from a niche player into a more mainstream automaker. But the roll-out of the car has been marred by manufacturing issues at Tesla’s California assembly plant and at its battery factory near Reno, Nevada. Tesla delayed by a quarter its target to produce 5,000 Model 3s per week, and the company hasn’t said whether the 10,000-unit weekly pace it was planning for sometime this year is still possible.

“People are past the shine of saying, ‘OK, you guys are a great design and marketing house,’” Joe Fath, a fund manager at T. Rowe Price, one of Tesla’s largest shareholders, said by phone. “Now they want to see the manufacturing execution come through.”...

Although much attention will be on the Model 3, Tesla will also release sales and production figures for its flagship Model S sedan and Model X sport utility vehicle. The company delivered 76,230 vehicles in 2016 and has said it expects to deliver about 100,000 Model S and X vehicles in 2017.

Tesla pushes back Model 3 production target as fourth-quarter deliveries fall short

...Tesla Inc. said late Wednesday it delivered 29,870 vehicles in the fourth quarter, slightly less than expectations, and pushed back a Model 3 production target to the second quarter of this year while seeking to assure investors it had figured out the “bottlenecks” that have plagued the sedan’s early production.

Tesla TSLA, -2.29% said it delivered 1,550 Model 3 sedans, 15,200 Model S sedans, and 13,120 Model X SUVs in the fourth quarter, and that more than 800 Model 3s were in transit. Analysts polled by FactSet had expected about 30,000 vehicles delivered in the quarter, with about 4,000 expected to be Model 3.

The Silicon Valley car maker said it made “major progress addressing Model 3 production bottlenecks,” with the production rate increasing “significantly” toward the end of the quarter. It added, however, that it now expects to reach a production rate of 5,000 Model 3 sedans a week by the end of the second quarter.

Tesla had promised shareholders it would ramp up Model 3 production to 5,000 sedans a week in 2017 and then on to 10,000 a week in 2018, but production bottlenecks disclosed in October led the company to push back its 2017 goal to late in the first quarter of 2018, putting pressure on the company’s cash position.

... it expects “a slightly more gradual ramp through Q1,” likely ending the quarter a weekly rate of about 2,500 Model 3 vehicles...

If you’re a Tesla investor who’s OK with its announcement of how many cars it delivered in the last quarter of 2017, then it might be time to ask yourself: Why even read it?

Let’s go through the motions of parsing the numbers. Tesla Inc. delivered almost 30,000 vehicles in the fourth quarter, the highest so far, and produced 24,565, which is actually down slightly on last year.

The overall picture is one of momentum having largely stalled since late 2016...

This vehicle is critical to the company getting anywhere close to becoming self-funding. In the meantime, it is critical to Tesla living up to its boasts of manufacturing prowess that help it raise new money from others.

On this front, Tesla didn’t live up to its guidance. But what does that even mean, really?

CEO Elon Musk originally spoke of delivering 100,000 to 200,000 Model 3s in the second half of 2017. He’s revised that down, in different ways, over time. By last July, he was speaking about hitting production of 5,000 a week by the end of the year. That was definitely less than the average of about 5,700 implied by the midpoint of the original range. On the other hand, the narrative had moved from absolute totals to an exit rate, so it wasn’t really comparable at all. Still, the average had clearly moved a lot lower.

Come the third-quarter results call, in early November, the 5,000 figure had been pushed to the end of the first-quarter of 2018 and production was meant to be “in the thousands” by the end of the year.

Whatever that meant, Tesla didn’t meet it. It produced 2,425 Model 3s in the whole quarter; 793 of them in the last seven days of it, the company says. Tesla adds, however:

In the last few days, we hit a production rate on each of our manufacturing lines that extrapolates to over 1,000 Model 3’s per week. As a result of the significant growth in our production rate, we made as many Model 3’s since December 9th as we did in the more than four months of Model 3 production up to that point...

Tesla clearly wants to emphasize that, despite 2017 production of Model 3s coming in at all of 1-to-2 percent of original guidance, it is accelerating now. But when you start getting into extrapolated run rates -- and pushing back that totemic 5,000-per-week figure by yet another quarter -- it tends to undercut the message...

And the new targets have a real impact for a company burning well north of $1 billion per quarter in negative free cash flow. Every delayed Model 3 is revenue that isn’t coming in yet to offset the billions of dollars already put into building that hellish production line the company is trying to crank up...

Which leads to the perpetual question of TSLA, how soon will it run out of cash, and how will it attempt to forestall insolvency?

A reasonable guess:

Tesla's Model 3 Challenges Leave Little ‘Wiggle Room’ on Cash

...Tesla’s slower ramp up in manufacturing Model 3s led analysts to speculate another capital raise could be coming. The carmaker has been blowing through more than $1 billion a quarter as it’s had trouble scaling up output...

“We believe a fundraise will be necessary for Tesla in 2018,” Brian Johnson, an analyst at Barclays Plc, wrote in a report to clients Thursday. He projects the company will burn through $4.2 billion this year and assumes the company will raise $2.5 billion in an equity offering, likely during the third quarter.

Tesla reported deliveries of 1,550 Model 3s in the final three months of the year, trailing analysts’ average estimate for about 2,900 units in a Bloomberg News survey...

I think a bunch of us Tesla-Leaf owners just need to go over to Ed's and invite him to go have some fun. He is stressing himself out too much and it has to be tough being Chicken Little. Maybe some friendly smiles and doing something fun together and helping him be part of the experience might help him soften his hard-line edge. Sometimes all it takes is caring people to help others to help them through it.

Evoforce wrote:I think a bunch of us Tesla-Leaf owners just need to go over to Ed's and invite him to go have some fun. He is stressing himself out too much and it has to be tough being Chicken Little. Maybe some friendly smiles and doing something fun together and helping him be part of the experience might help him soften his hard-line edge. Sometimes all it takes is caring people to help others to help them through it.

You do realize he is trying to make money by "shorting" Tesla, correct?

LOL at anyone who has ever bet against Elon though. They have been proven wrong time after time.